Reformed GST and Flood Tax under discussion in Parliament

The Finance Minister Mr. Abdul Hafeez Sheikh presented Reformed GST and one time Flood tax bills in the Parliament for discussion and subsequent approval. These bills were later introduced in Senate as well. The imposition of ‘Reformed GST’ is a requirement of IMF for providing the next tranche of IMF loan to Pakistan. The sales tax reform imposes the sales tax of 15% on all goods purchased and sold, as compared to the present 17 to 25 percent, but additional revenue is expected by eliminating the exemptions given. The Second bill proposes implementation of 10% additional surcharge on income tax payable for tax year 2010-11 and an increase of 1% in the excise duty. This will help in release of extra pressure of expenditures on reconstruction and rehabilitation activities. At present a large majority of members of Parliament is opposing these bills; let’s see what strategy will be adopted by GOP to tackle this opposition.